NSW environmental laws to be strengthened under new Bill to address unscrupulous business models and enhance enforcement and accountability

On 24 November 2021, the NSW Government introduced into Parliament the Environment Legislation Amendment Bill 2021. The Bill, if passed by Parliament, will primarily make changes to the Protection of the Environment Operations Act 1997 (POEO Act), the Contaminated Land Management Act 1997 (CLM Act), the Pesticides Act 1999, the Radiation Control Act 1990, and the Protection of the Environment Administration Act 1991.

The main purposes of the Bill are to improve enforcement, increase penalties, and make related bodies corporate and persons concerned (or formerly concerned) in the management of a company liable. Some of the changes are significant given that appeal rights and defences, including due diligence defences, don’t always apply.

In introducing the Bill it was noted that “Some industry sectors, businesses and individuals have established practices that enable them to deflect accountability and avoid enforcement clean-up and compliance costs by setting up complex corporate structures…. To address this, the bill proposes several amendments to break through these unscrupulous business models”. Whilst it is not unusual to find that directors are liable, it is a significant expansion that it include related bodies corporate, current directors and directors of related bodies corporate.

The material changes proposed are summarised below.

The EPA has increased powers to issue notices and orders

Currently under the CLM Act, the EPA can only issue a clean up or prevention notice for significantly contaminated land as determined by the EPA. Given it may take some time for that finding of “significance” to be made, the EPA under this new power could issue clean up and prevention notices immediately after a landowner or occupier voluntarily reports to the EPA that its land could be significantly contaminated under section 60.

Changes proposed to the POEO Act will empower the EPA to:

  • Issue clean up notices not only to the person who is reasonably suspected as having caused the incident, but reasonably suspected as having contributed to it, to any extent. There are no appeal rights with respect to clean up notices (including where the extent of the clean up is greater than that person’s contribution) and the reasonable suspicion requirement is a low threshold test. Whilst the recipient of a clean up notice can seek to recover its costs from other persons who caused or contributed to the incident, this can be of limited assistance where those persons cannot be found or are impecunious. Under the Bill, the EPA can also seek to recover its costs of complying with a clean up notice, from persons who have only contributed to the incident, to any extent.
  • Issue prohibition notices beyond specific activities on a specific site relating to a specific incident, to a class of premises or specific activity at a class of premises or to ask a specific class of people to prohibit their activities. The second reading speech notes that :This power could be used to prevent those who have repeatedly committed crimes from moving to different premises and continuing their bad behaviour.”
  • Register public positive covenants under section 88E of the Conveyancing Act 1919 to reflect obligations under surrendered or revoked conditions of licences that continue to apply to land that used to be licensed or has residual contamination. In addition to that, the EPA can impose additional requirements such as requirements to:
    • inform the EPA of a change in the ownership or occupancy of the land,
    • to not carry out specified activities on the land.

Importantly, the EPA is specifically empowered to enforce the restriction or covenant against not only the owners or lessee but also the mortgagee of the land.

Managers, directors and related bodies corporate are now open to a wider range of offences and liability for acts of the company or related body corporate (RBC)

Across the various pieces of environmental legislation mentioned above, a new offence will be created making any director (including persons concerned in the management), former director, RBC or director or former director of a RBC, that receives a monetary benefit from an offence, deemed to have committed the underlying offence with the same maximum penalty as the underlying offence.

The EPA can bring such a proceedings no later than 12 months after the underlying offence was made and this new offence can apply to offences currently charged but not yet concluded. There is no defence to directors, Managers and RBC under this new provision.

Under the POEO Act, if a company has been convicted of an offence, the EPA can then seek a monetary benefits order (representing the amount of monetary benefit accrued by reason of the offence) not just against the company but against directors, former directors (at the relevant time), RBC and directors of RBC. The EPA can also seek a restraining order against those persons dealing with the proceeds of crime until the EPA concludes its recovery proceedings.

In addition, where a company fails to comply with notices or orders issued by the EPA, under the Bill the EPA can require directors (former and current), RBC and directors of the RBC to comply with the notice or order. This new provision would apply to notices and orders issued before the legislation is amended.

Owners of vehicles liable for waste transported in it

Currently, the person transporting or the owner of waste in a vehicle is liable for its unlawful transportation. Given it can be difficult to prove who is driving a vehicle or where the waste came from, the Bill proposes a new offence deeming the owner of the vehicle found to be unlawfully transporting waste, liable. There is no defence for this offence.

Impairing EPA enforcement

The Bill also imposes new offences relating to:

  • The provision of any information to the EPA that is false or misleading in a material respect. This now includes voluntary information given. It is a defence if the person took all reasonable steps to ensure the information was not false or misleading in a material respect. The maximum penalty is $500K or $1M if the person knew the information was false.
  • Delaying, obstructing, assaulting, threatening or intimidating an authorised officer in the exercise of the authorised officer’s powers.

The Bill if passed demonstrates the importance that directors and companies must place on environmental compliance and ensuring that their dealings with the EPA are honest. Contact the Environment and Planning group to find out how we can assist.

Liability limited by a scheme approved under Professional Standards Legislation.
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